House Prices Rising Or Falling?

by | Friday 2nd Sep 2022 | Mortgage News


How much is my house worth if I look to sell in the next 12 months? How much will I have to fork out to be able to afford a house? Will properties become cheaper? Is the UK set for a housing market crash? Are house prices rising or falling? All valid questions to ask in an uncertain market and it seems that different organisations and people are of different conflicting opinions. In this article we are going to take a look at a few industry expert opinions.

For the longest time it seems like property prices have just kept on creeping up with no signs of slowing down and especially in the last couple of years, they seem to have sky rocketed. In fact, the average price of a property in the UK has increased by 12.4% in the last year alone. The average house price in the UK outside of London has risen now to £274,000 and inside of London is a whopping £563,000! Post pandemic saw thousands of people, who had been confined in their houses, looking for a new place to live and the demand for property went through the roof.

What Are Experts Saying About House Prices Rising Or Falling?

But, recent months have seen conflicting figures and predictions about how the value of properties may be affected by the looming financial crisis. Nationwide building society, in recently released figures have shown that house prices have began to slow in August 2022. House prices rose by 10% on an annual basis this August, down from 11% in July 2022. Despite the slight drop, figures are still very high compared to last year where properties were on average £50K cheaper.

It seems that Nationwide are expecting a slump in the housing market. Nationwide chief economist Robert Gardner has commented: “There are signs that the housing market is losing some momentum, with surveyors reporting fewer new buyer enquiries in recent months and the number of mortgage approvals for house purchases falling below pre-pandemic levels.”

Very much in agreement with Nationwide are Hamptons estate agents who are currently predicting a 0% house price growth in 2023. They see the rising mortgage rates and rising cost of living will have a major impact on people’s appetite for purchasing property.

Hamptons Estate Agents

Aneisha Beveridge, head of research at Hamptons has commented: “The housing market has outperformed our expectations once again in 2022, but with a cocktail of risks on the horizon, growth is likely to stall next year. Financial pressures are raining down on households as inflation bites and mortgage rates rise. And it’s unlikely we’ve seen the worst of it yet, with rates expected to peak at the beginning of 2023. This means price growth in the years running up to 2025 will add up to 2021 levels. All eyes are on interest rates as this will be the key determinant of house price growth in the coming years. Given many mortgaged homeowners won’t have witnessed interest rate rises, it will take time for them to adjust.

While it’s likely that the base rate will remain lower than it has in the past, higher levels of mortgage debt will magnify the impact of even small rises. If mortgage rates surpass the 5% mark, there’s a much stronger likelihood that house prices will fall. With more stringent affordability testing in place since the financial crash and a record share of outright homeowners, we’re likely to see fewer repossessions and forced sales which were a key driver of house price falls in 2008. Low-yielding landlords are the group most likely to sell up as they come under pressure from rising mortgage costs and new legislation.

Longer-term, we expect the market to return to its traditional cycle. Price growth will begin to recover in 2024, with London leading the way as a new cycle dawns in 2025. However, stretched affordability will mean we’re likely to see considerably less price growth than in the past.”

Roger Baird And Benham & Reeves

However, others have a more positive view on the house price rising or falling debate. Roger Baird in his article for Mortgage Strategy claims that house prices will lift 5% by the end of the year. Quoting research by estate agents Benham and Reeves, Baird claims that house prices are continuing to climb despite the Bank of England raising interest rates and the increase in the cost of living. Baird says that the rise in interest rates will add a further £14,320 to the average price of properties in the UK.

Benham and Reeves director Marc von Grundherr comments in Baird’s article saying: “We keep waiting for house prices to plateau, but it’s just not happening. The pandemic-inspired boom in demand and value has supercharged the housing market to such an extent that it seems even a cost of living crisis and soaring interest rates can’t stop it in its tracks. So much so that house prices are likely to keep on climbing as the year plays out and in some areas, this will equate to quite a significant increase in property values. As for if and when prices will finally fall – it’s hard to predict. But if this coming winter is going to be as tough as most are suggesting it will be, we might find that moving home is pushed to the very bottom of most people’s to-do lists and property values might, therefore, start to decline.”

So are house prices rising or falling? From what we can see, it seems that house price rises are slowing down but have not ground to a halt just yet. We think that as the economy heads towards recession, people will be more cautious about purchasing and this will have a direct impact on the price of properties. But we think that the appetite for selling and buying will still be strong. Of course, we can only predict as the other people we mention in this article have. If you or anyone you know is thinking of selling their property and/or buying a new property, please feel free to give our helpful advisor a call today to talk through your options. 

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